Act Global, Think Local
By Cliff Stevenson from i4cp | July 18, 2012, Issue 553
After a long day of reviewing and editing i4cp's newest study, High-Performance Global Staffing: Shifting Labor Supplies and Strategies, I happened to notice the iconic bumper sticker on the car in front of me as I drove home: Think Global, Act Local.
Based on our research, I suggest we flip that phrase in corporations today.
First, it's clear that global expansion is alive and well. Among the many findings from this report, one of the more intriguing is that 93% of respondents say that their company will maintain or increase its global staffing within the next three years. This is quite dramatic considering the current political climate that alternately seeks to paint a picture of unbridled economic expansion or quickly impending doom.
Note that the question asked specifically about the global workforce in the next three years. If the question was asking about the next three months, we might possibly see some very different answers. As opposed to just maintaining global staffing, 60% of all companies polled indicated they expect some expansion of their global workforce in the next three years. For high-performance organizations, this number jumps to 74%.
These results raise the question: could an increase in global staffing simply be a reflection on an expected decrease in local or national staffing? In short, are more jobs moving overseas?
According to the Bureau of Labors Statistics' (BLS) employment forecasts for the U.S., in this decade (2010-2020) overall job growth is expected to be around 0.7% annually. This is a fairly low number in comparison with past decades (0.8% annual growth in 2000-2010, and 1.3% in 1990-2000), but it is still in line with the concept of staffing expansion contained in i4cp's latest findings.
Interestingly, the sectors that will account for a quarter of these jobs are in industries that are logistically very hard to outsource. According to the BLS report, about 5.0 million new jobs - which represents 25% of all new jobs - are expected in three specific industries not known for outsourcing: construction, retail trade and the offices of health practitioners. Seven of the 20 industries gaining the most jobs are in the health and social assistance sector, and five are in the professional and business services sector.
Due to the very nature of these types of jobs, it would seem that these are industries that would not be increasing their global staffing, but the opposite is true. Of all of the companies surveyed by i4cp that fall into these categories, not one is cutting back on their global staffing efforts, and 44% are planning on increasing their global staffing in some measure.
This would suggest that even U.S.-based industries that are typically tied to a local workforce are expecting a heightened need to increase the size of their global workforce, and they expect to have the ability to fulfill that need.
However, fulfilling the leadership need is a question that seems to perplex most i4cp member companies that are expanding globally. "Should we source locally or rely on expatriates to provide that leadership?" is a common question we hear from our membership.
The answer appears to be somewhere in-between.
The importance of having a cross-cultural management team is often emphasized in business literature, and all sorts of positive outcomes are meant to be derived from that practice. Better communication, a quicker response to business needs and greater protection from liability are often cited as beneficial results of having a multi-cultural management group.
i4cp's study supports this theory, and found that nearly 48% of high-performing companies prefer to use a mix of expatriates from their headquarters and locally hired people. Very few high-performing companies relied solely on expatriates to provide that leadership. Indeed, the movement toward hiring more leaders locally appears to be on the rise among most global organizations.
Continuing the trend of cultural fusion, when looking below the leadership line there is a fairly large disparity between high- and low-performing organizations in how they deal with technically skilled employees. Forty-one percent of high-performance organizations (HPOs) prefer to assign technically skilled employees regardless of where they were recruited, while a mere 18% of lower-performing organizations (LPOs) say the same. Also, HPOs are much less likely to move people from their home country to a foreign headquarters (or some other hub). Only 10% of HPOs say they do this compared to 24% of LPOs.
Where this global expansion is happening revealed a difference in expectations between HPOs and LPOs, primarily in the following regions: China (HPOs are 50% more likely to expand into China); Korea (340% more likely); and Western Europe (no LPOs polled said that they expect to expand into this area, compared to 48 multinational HPOs). By comparison, HPOs are less likely to go into Eastern Europe (42% less likely) than LPOs.
While global expansion is forecasted by these organizations to remain robust, the data suggests that it's actually an improvement in the U.S. economy and workforce that is driving the growth of global staffing efforts. Whether those global staffing efforts are in China, India or some other country, it appears that more and more organizations will rely on local leadership to make that expansion successful.
Act global, think local. Anyone know a good custom bumper sticker website?